Amazon.com, California Thanks You for Potholes

Amazon.com ruined my day today. I was walking around Lake Merritt, as I do every day with my friend, Susan Southwick. I was approached by a dweeby looking guy with a clip board asking me to sign my support for an initiative that would allow Amazon.com to continue evading the collection of California sales tax, as they have done since their inception in 1996. The dweeby guy said that the initiative would lower taxes and create jobs. Instead of walking away, I decided that I would scream at him and proceeded to do so for 10-15 minutes. I accused him of …well, I won’t bore you….pretty much everything in the book.  I felt really great and  energized when I finally told him that I had nothing but contempt for his pathetic, impoverished, morally bankrupt life. I had a few more nuggets to tell him after that, but Susan had become embarrassed by the scene and had started briskly walking away down the path.

 

Let’s back up. Recently California passed a law requiring Amazon to hand over the estimated $83,000,000  in  uncollected sales tax revenue for 2011  and to start collecting from California customers  going forward.  A number of states have decided that it is time to have Amazon do its duty. After all Amazon benefits immeasurably from the maintenance of roads which   allows Amazon to deliver their goods to customers. The company profits  from the sales tax support of public education that creates consumers of books. And let’s not forget that sales tax help  pay for police, fire, and emergency services that give us the basis of an orderly society, without which no commerce – no civilization even — could exist.

 

 When the new California law was passed and signed by the governor, Amazon within hours cut off the thousands of “associates” in California, many of them PTAs and non-profits who direct sales to Amazon and get commissions to fund their good works. In a breathtaking exercise of shameless chutzpah, Amazon claimed that by allowing  the world’s largest online company to evade sales tax so that they can unfairly compete against local business, the state is  harming small businesses and killing jobs in California. Many of the associates who  unceremoniously had their commissions from Amazon cut off with 12 hours notice seem to be buying this argument. A classic example of victims identifying with the executioner.

 

Which brings us back to the dweeb at Lake Merritt. Not content with pulling the plug on the associates, Amazon has bankrolled a ballot measure with a sort of Orwellian name like “tax fairness initiative”. And so the California initiative process, originally created to give power to the people, once again is being manipulated by big out of state business to harm the people in  the state.

 

Let’s engage in a mental exercise. California claims that Amazon owes $83,000,000 for sales tax for 2011 alone. Let’s estimate that in the last five years Amazon has evaded conservatively $300,000,000 in sales tax collection. Here is what California could have done with the money.

 

• Hired 3000 elementary school teachers.
• Hired 2000 police officers
• Funded music programs in 1000 schools
• Fixed 3,000,000 pot holes
• Hired 2000 university professors
• Provided academic scholarships  for 7500 students
• Saved the lives of 1,500,000 puppies
• Funded 1000 homeless shelters
• Paid for school lunches for 300,000 needy kids
• Bought 10,000,000 books for schools and libraries (And if those books were bought from local independent book stores, it would create thousands more jobs for people who pay taxes to California. And I might add allow those stores to survive and thrive and offer a richness to local communities that Amazon cannot match.)

 

Tax fairness, indeed!

Helping small business, indeed!

More jobs in California, indeed!

 

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Audacity of Greed Part 3 – Amazon. Com and the Governor of California

 Well, apparently Amazon.com’s threat to shut down their affiliate programs in states that are cracking down on Internet sales tax evasion is succeeding. On July 1, Governor Schwarzenegger vetoed the budget bill that included the provision for Internet merchants to be required to collect the same sales taxes that are required of local merchants.

In doing so, the Governor made an additional comment addressing specifically  his position on sales tax collection on Internet commerce. He spoke of Overstock.com, a shabby, bottom-feeding  Internet company which, like Amazon.com,  is also threatening to cut off their California Affiliates.

Here is what he said:

“Governor Schwarzenegger Remains Committed to No New Taxes, Announces Overstock.com Will Continue to do Business in California

 

“After passing the largest tax increase in California history, it makes absolutely no sense to go back to the taxpayers to solve the current shortfall – that’s why yesterday I vetoed the majority vote tax increase passed by the legislature. With unemployment at an all time high, we should be doing everything we can to – keep jobs and create jobs – in California. That is why my Administration immediately contacted Overstock.com when we learned of this news and, I am pleased to announce Overstock.com has reversed its decision and will continue to do business with affiliates here in California. I will continue to fight to keep jobs and businesses in California.”

 

The Governor has really jumped down a rabbit hole on this one.

 

The Governor’s statement implies that his opposition is due to his unwillingness to have a tax increase. He knows very well that the Internet sales tax issue is one of collecting an existing tax that is being evaded by Internet merchants like Amazon.com. The sales tax  is not a new tax. It has been on the books for half a century.

 

The Governor also says that he reassured Overstock.com (and presumably Amazon.com)  that he would continue to support their tax evasion [my words, not his] in order to  to protect California jobs. But neither Overstock.com nor Amazon.com employs workers in California. Instead he is giving them a tax advantage over local companies and depriving those companies that do create jobs in California to compete on a level playing field.

 

As Tennessee Williams famously said: “I smell the smell of mendacity in this room”.

 

Audacity of Greed Pt. 2. Amazon.com seeks to hijack California tax policy

There is beginning a backlash against Amazon’s efforts to  intimidate Calfornia into  maintaining a tax break that is probably illegal. I am quoting a statement from Kristen McLean, executive director of the Association of Booksellers for Children. She makes a telling point.

An Alternative for Ex-Amazon Affiliates Jun 30, 2009

The following “open condolence letter to former Amazon affiliates” comes from Kristen McLean, executive director of the Association of Booksellers for Children:

Boy, it sure sucks to be dumped.

There you are, doing a great job of recommending awesome books, handing Amazon the sales, and they just up and leave the party.

To add injury to insult, I’m sure it didn’t feel good to hear from the Wall Street Journal that collective sales from your sites only “account for a relatively small slice of Amazon’s traffic, so the move isn’t likely to cause major damage to the company’s business.”

It’s like the morning after the prom, when in wrinkled dress and wilting corsage you realize they’re just not that into you. At least, not when they may have to collect millions in state sales tax that could help fix bridges, keep schools open and fund libraries at a time when your states are truly suffering.

And they seemed so nice.

Well, I want to invite you to the indie party. While the flashy prom has been happening at the country club, we’ve been holding our own get-together in the gym. What we lack in glamour, we make up for in charm. Like you, we love to recommend books. We think it’s cool that you’re recommending books, and with us there’s no such thing as too small. We won’t marginalize you. And we all pay our local taxes.

Best of all we have an affiliate program too! It’s called IndieBound, and we’d love to have you be a part of it. You’ll get a reward for using it, your readers can keep getting their books off your site, and your state will benefit in the end. Everyone wins.

Again, we’re sorry that you lost your date. (We never really liked them anyway.) We promise we won’t leave you hanging.

The Audacity of Greed –Amazon Threatens the State of California

This is really the bottom of the barrel. California has a bill in the legislature that will require Amazon.com and other out of state Internet retailers to collect sales tax on transactions where the buyer lives in California. For years now, Amazon has been evading collecting these taxes. And the State of California has been turning a blind eye. This deprives the state and cities of much needed revenue to support education, police and fire services. It also gives Amazon an unfair competitive advantage over California businesses that are required to collect the taxes. Thus the state has been supporting out of state business at the expense of local business and community services. In essence, California has been giving a tax break to citizens who buy products on-line. It is a disgrace and is probably illegal.

But it gets better. At last, the State of California has started to get cojones and try to get Amazon to do its duty and collect the taxes. God knows we need that revenue. A similar law has already been passed in New York and is being considered in North Caralina and Hawaii. Yesterday Amazon sent a letter to the California state legislature. (read about it here). Amazon warned the legislature that if California tried to get them to collect sales tax, they would stop doing business with all Amazon “affiliates” in California. Amazon has hundreds of thousands of these affiliates. These are the websites that link to Amazon and get commissions back for all sales originating from the link.

So this is rich. Not only has Amazon evaded collecting California sales tax, thus adding to the burdens of state services; but in retaliation they are going to cut off these affiliates who drive business to Amazon and get money back in return. Most of these affiliates are non-profits and PTA’s, the very entities that are already being hurt by the California economic crisis and by tax evading large corporations like Amazon.com.

I don’t know what the rest of you think about this. But I think it stinks.

Jeff Bezos ought to be ashamed of himself.